Tuesday, September 05, 2006

New Domestic Source of Oil Discovered

A trio of oil companies led by Chevron Corp. has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost the nation's reserves by more than 50 percent.

A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago.

But before we get too excited, we are cautioned:

But the vast oil deposit roughly four miles beneath the ocean floor won't significantly reduce the country's dependence on foreign oil and it won't help lower prices at the pump anytime soon, analysts said.

"It's a nice positive, but the U.S. still has a big difference between its consumption and indigenous production," said Art Smith, chief executive of energy consultant John S. Herold. "We'll still be importing more than 50 percent of our oil needs."

Apparently we're not supposed to see this for what it is; a small step toward energy independence and a small step away from our continued financing of the global jihad.

"This could not have happened in a better place," Devon CEO Larry Nichols said in a conference call with analysts.

The successful test well does not mean a huge supply of cheap oil will hit the market anytime soon.

Oppenheimer & Co. analyst Fadel Gheit estimated that the first production for the Chevron-led partnership might not come on line until after 2010, depending on how many more test wells the companies drill. That said, many companies, including BP PLC, Exxon Mobil Corp. and Anadarko Petroleum Corp., stand to benefit from their own projects in the so-called lower tertiary, a rock formation that is 24 million to 65 million years old.

"They may be the first ones to hit the jackpot, but if the current thinking is correct, this is only a beginning," Gheit said.

So I won't jump for joy, but I will look forward to oil companies discovering more new sources of domestic oil even though it will be years until they hit the market.

Eventually there may be other energy sources that are cleaner and better than oil, but as long as our economy depends upon oil now, we'd better let the oil companies keep drilling right here in the United States.

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